The sustainability of Health Information Exchanges

Health information exchange is a key piece in the national effort to build an interconnected health care delivery system. Their potential to improve health care quality, reduce medical errors, and lower costs by means of increased interoperability and information-sharing among patients, providers, payors and other stakeholders is tremendous.

Towards that end, the HIT Policy Committee (which advises the Office of the National Coordinator – the ONC – on policy matters) has an HIE workgroup that has been working very diligently on the policy issues involved. Right now, the focus is on building healthcare Provider Directories to facilitate such data exchange.

The technical aspects of information exchange have been nicely described as consisting of 3 necessary components to transport healthcare data from point A to point B: (1) you need a routing method (REST, SOAP, SMPT), (2) you need a directory that tells you where to route, and (3) you need certificate management to ensure that the message is not read or modified during transmission.

Getting messages from point A to point B can be quite messy, if the connections are all point-to-point. That would mean that each and every practice would need to connect (separately) to each and every data source for which heath information exchange is desired – each hospital, each lab, every other physician, every pharmacy. That is simply not a practical solution. The solution that has worked to address this dilemma has been the Health Information Exchange (HIE), which is basically a data-exchange clearinghouse.

A clearinghouse is a hub, which everyone subscribes to, and is able to route information to its connections. Examples of such clearinghouses are abundant in the billing world – a billing program sends all the claims to a central hub (which health plans are also connected to), the hub makes sure everything is in the proper format, and then sends the bills to the end recipients. Another example of such a hub is Surescripts, which is the main hub created by pharmacies and pharmacy benefits managers (PBMs) where every e-prescribing program (like Practice Fusion) sends its e-prescriptions; Surescripts then forwards those prescriptions to the intended retail pharmacy. One hub-one connection. That is the principle behind HIEs – they are clearinghouses for health information exchange.

However, the technical aspects of health information exchange are not the real stumbling block. The real question is this: if you create a system of HIEs across the country, how will these organizations sustain themselves in an ongoing way? What business models will they use? Will physicians be charged a fee in order to get records from their local hospitals? Who will pay for this? These questions have more impact on the way health data exchange will evolve than policy and technical issues (though I don’t want to minimize the technical and policy challenges being taken up by the ONC’s advisory committees).

A sentinel article published by the Deloitte Center for Health Solutions addresses the question of HIE business models, and the challenge of sustainability. The article describes the roughly 165 different HIE attempts, as of the 2006 publication date, with many more emerging in the era of ARRA and HITECH. These efforts can be grouped into (1) not-for-profit HIEs, financed through Fed/State grants/stakeholder contributions; (2) public utility models, paid for by subscriptions vs. transaction fees; (3) physician and payor collaboratives, financed by common and collaborative funding from both entities; and (4) for-profit HIEs, funded by private investment.

The most successful model has been a combination of subscriptions with some transaction fees levied. This is similar to the model used by billing-service clearinghouses.

Of note, there is a potential significant role for payors (health insurance plans) in HIE funding. Quoting the article: “Providing funds to help develop and operate HIEs has an immediate political benefit for payors. Physicians and hospitals already believe that these organizations should take a larger role in paying for such networks, given that the largest financial benefit accrues to them and payors stand to gain much more than good will. Lowering the costs of care by reducing duplicate tests and identifying diseases earlier can enable payors to invest in strategies that can engender long-term loyalty among plan providers and patients. Additionally, a fully functioning HIE can give payors an opportunity to create financial incentives for participating physicians and hospitals, including discounts on fees or other cost reductions.”

The success of HIEs will likely be quite varied. Much attention (appropriately) has been paid to the technical aspects of ensuring privacy and security of the data being transmitted. Seed money for launching HIEs is part of HITECH, and is a branch of the ONC’s efforts. However, when that initial funding runs out, sustainability of these new organizations will depend on how well they pay attention to their business models.

For many HIEs, the membership/subscription model, enhanced by transaction fees, appears to be the most effective means to achieve sustainability – but who pays these fees is uncertain. The role of health plans (payors) needs to be more prominent. Given that, while institutions have been willing to invest in large, complex (and expensive) Electronic Health Record (EHR) systems, individual physicians have been much more unwilling or unable to do so – when we introduced a web-based option to such physicians, the uptake has been staggering. Given that physicians bear much of the workload brunt of the change to digitization, but receive little of the immediate financial benefit, there is no reason to believe they will be enthusiastic about paying a subscription in order to access outside medical data, and get that data into their charts.

Laboratories already subsidize the limited-HIE capabilities they use to push their data into physician EHRs – after all, it is less expensive for them to report their results this way than to pay for couriers and hard print-outs. Similarly, pharmacies and PBMs subsidize Surescripts, as direct electronic prescribing bypasses the manual and expensive method of processing paper prescriptions. Hospitals may be willing to contribute subscription fees to a local HIE, since such access to their data reduces their overhead in clerical and faxing costs sending copies to local physicians when prompted by manual phone calls. And, most importantly, health plans should take a significant role in subsidizing (i.e. paying the subscription and transaction fees) for local HIEs, as they directly benefit from the increased efficiencies and measurably improved quality that results from having on-demand access to clinical data that e
xists outside a physician’s local EHR.

There will be success stories and failures among the many HIEs in existence. Some that are in existence today will not be here in a year or two, while others that have not yet formed may be dominant in years to come. And the impact of large, centralized data sources – like Practice Fusion’s web EHR – which cross-connects tens of thousands of physicians, and millions of patient records, has yet to be fully realized among HIEs. The next few years will be very telling.

Robert Rowley, MD
Chief Medical Officer
Practice Fusion EMR